Daily Note

Stocks and Bonds Drop After Hopes for Bad News Fades

Jul 5, 2019

Thomas Thornton

On my recent Real Vision trade idea interview I said essentially what if something like earnings or economic data came out a little better?  It was part of my thought that bonds were a short with extreme bullish sentiment and a whole lot of DeMark signals on various bond proxies and with different time periods.  Today's better jobs data sent bonds dropping hard right after the data hit.  It also sent stocks down which seems strange since it's good news right?  The markets are reacting this way only because the narrative of "We want bad news so the Fed will cut" is over.  They may still cut in July but it's not going to be 50bps as those who hoped for the Fed to kick into high gear a breakout in the markets.  Even President Trump weighed in saying "The Fed doesn't know what they are doing" which sparked an intraday bounce on hopes his pressure on the Fed will convince Powell to cut despite the markets near all time highs and a giant bond market rally seen this year.  The USD is lifting causing a lot of collateral damage across the world too.


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